Commercial real estate investment is like any other investment. You have an end goal – making more money than you spent. The processes, and setting your objectives, offer a great deal of latitude in how to turn your initial investing dollars into a solid profit potential. The essence of this is asking the right questions before you acquire the property, not only about the property and seller, but also about your objectives with it.

The risky way to make money on commercial real estate is to “flip” the property – to invest in one, do renovations, or bring in new long-term tenants, and then sell it for more than you paid for it. This requires a decent understanding of your local commercial real estate market, market timing dynamics, and a lot of research. In many cases, it’s best to start lining up the buyer before you line up the property to sell. Other times, it’s simply a matter of having a piece of property at the right place and right time when an investor comes through, or when a city is expanding.

The more conventional approach to commercial real estate investment is a “buy and hold” strategy. You buy the property, invest in improvements, and bring in tenants who bring a good revenue stream with them. A general rule of thumb is that the revenue stream should be at least 20% greater than the monthly costs of maintaining the property, including labor, periodic fixes for damages, expenses incurred in moving tenants in and out, plus any finance charges on your money and depreciation and wear and tear.

Once your basic ownership strategy is in place, the next questions are about the property itself, and its neighborhood. First and foremost – are you buying a property that’s in a growth area? Is your local demographic young and adding jobs, or older? These both influence the decisions for buying commercial real estate properties.

Before committing to the property, look into the repairs that need to be done. If you haven’t done property renovations before, take the time to run some preliminary back of the envelope quotes for time and money. Sinking a lot of money into repairing a property can make sense if it lands you an anchor store or two, in an area where the municipality is growing.

Finally, look at cash flow. When all other details are factored in, current cash flow and future cash flow are the keys to making a buy-and-hold strategy work, and it’s worth it to pay more for a property now with greater cash flow potential later, particularly if you’re planning on using your commercial real estate income stream as your retirement income, or seed money for other projects.

The first step is making a decision. At the outset, it is important to make a real commitment when it comes to investing in real estate. While real estate will be able to provide you with financial success, it is not always fun and enjoyable. Effort is necessary to reach the fruition of your plans, as well as openness to learning new things without getting disheartened in the process.

Once you have committed to it, your nest step is to learn the basics. There are so many informational materials you can read up about investing in real estate. You can read books, attend seminars or look up some online resources. The cost can be minimal, because most of these resources are free. As you can see, it need not be expensive to get an education – but it will require a lot of time. Some of the things you need to read up on is the valuation of properties, title transfers, the basics of title insurances and other concepts. You can even read on up on this online, then add on to your knowledge base as soon as you have the basics covered. By the end of it all, you ought to know things like operating expenses, cash flow, cap rate and others.

Another thing you need to know has to do with financing. You must be able to differentiate between residential loans and commercial loans, because the differences of these will greatly affect your investment plans and outcomes. You can discuss these in further detail with a professional in the field. One more thing you need to know: finding and evaluating rental property. You can learn this in two ways: through a professional in investment property and through software about real estate investment. The former will clue you in on properties with potential; while the latter will help you compute and evaluate the cash flow of the property, its profitability and the rate of returns.

And finally, you have to get started on it. Do not keep waiting or delaying it, because as soon as you have done your homework and scoped out some properties with the potential for investment, you need to act as soon as possible. It is for your own good that you apply what you have learned right away so everything is fresh in your mind. If you stick to the books, you will never learn the pleasures that come with getting a return of investment in real estate. Additionally, the software can also give you a step by step teaching instruction on the nuances of investing once you have a good grasp of how the software runs and computes the numbers.